Johnathan Paoli
The National Treasury has confirmed that 67 municipalities currently indebted to Eskom, collectively owing R56.8 billion, have officially applied to participate in the debt write-off programme.
Finance Minister Enoch Godongwana was speaking on Wednesday during his Medium-Term Budget Policy Statement about the status of the country’s finances and confirmed that 28 applications for debt relief from municipalities had already been approved.
“By October 2023, 67 applications had been submitted, totalling R56.8 billion or 97% of total municipal debt owed to Eskom at end-March 2023,” said Godongwana.
Godonqwana said that applications have been approved; the remainder are being assessed and verified with provincial treasuries.
“The ultimate goal is the profound transformation of these municipalities, by empowering them to build financial resilience, amplify their capacity to generate sustainable revenue, and rekindle a culture of paying for services rendered.
“In light of the difficult financial conditions faced by municipalities, addressing the Eskom problem without dealing with the municipal non-payment and uptake of debt relief programme, would have been counterproductive.
“The debt-relief arrangement for Eskom outlined in the 2023 Budget noted that a large proportion of outstanding municipal debt is owed to Eskom. National government has introduced support to relieve municipalities of debt to Eskom.
“Upon application by a municipality, the debt to Eskom up to 31 March 2023 will be written off over a three-year period, in equal annual tranches. This is provided the municipality complies with set conditions,” Godongwana said.
Among the conditions imposed are the enforcement of strict credit controls, enhanced revenue collection, and up-to-date payment of the municipality’s current account.
Godongwana said that municipalities that don’t comply with the conditions will need to repay the remainder of their arrears debt to Eskom, including interest and penalties.
The Finance Minister said those municipalities who participated in relief programmes are expected to show sustained improvement in their financial condition.
Municipalities allocated R26 billion to repairs and maintenance of assets in 2021/22, and is expected to increase to R27 billion in 2022/23 and to R28.1 billion in 2022/23, with capital expenditure decreasing by 1.5% compared to the original budget for the 2020/21 financial year.
“The ultimate goal is the profound transformation of these municipalities, by enabling them to build financial resilience, amplify their capacity to generate sustainable revenue, and rekindle a culture of paying for services rendered”.
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